UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 29, 2010
01-34219
(Commission File Number)
CASUAL MALE RETAIL GROUP, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 04-2623104 | |
| (State of Incorporation) | (IRS Employer Identification Number) |
555 Turnpike Street, Canton, Massachusetts 02021
(Address of registrant’s principal executive office)
(781) 828-9300
(Registrant’s telephone number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 7.01 - Regulation FD Disclosure
The Company will be presenting an investor slide presentation at upcoming meetings with various investment groups. A copy of the slide presentation is attached to this report as Exhibit 99.1, and is incorporated by reference herein.
The slide presentation contained in the exhibit includes statements intended as “forward-looking statements,” which are subject to the cautionary statement about forward-looking statements set forth in the exhibit. The slide presentation is being furnished, not filed, pursuant to Regulation FD. Accordingly, the slide presentation will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the slide presentation is not intended to, and does not, constitute a determination or admission by the Company that the information in the slide presentation is material or complete, or that investors should consider this information before making an investment decision with respect to the Company.
Presentation of Non-GAAP Measures
The slide presentation includes the discussion of non-GAAP free cash flow on slides 3, 7, 26 and 28. Free cash flow is not a measure determined by generally accepted accounting principles (“GAAP”) and should not be considered superior to or as a substitute for net income (loss) or cash flows from operating activities or any other measure of performance derived in accordance with GAAP.
In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, “free cash flows” as presented in this slide presentation may not be comparable to similar measures used by other companies. The Company calculates free cash flows as cash flow from operating activities less capital expenditures and discretionary store asset acquisitions, if any. We believe that inclusion of this non-GAAP measure helps investors gain a better understanding of our performance, especially when comparing such results to previous periods
Free cash flow is calculated as follows for each of the respective fiscal years, as disclosed on slide 26 of the slide presentation:
| (in millions) |
Projected Fiscal 2010 |
Fiscal 2009 |
Fiscal 2008 |
Fiscal 2007 |
Fiscal 2006 |
||||||||||||
| Cash flow provided by operations |
$ | 30.0 | $ | 30.8 | $ | 23.2 | $ | 11.7 | $ | 12.1 | |||||||
| Less: capital expenditures |
10.0 | 4.6 | 12.6 | 21.4 | 22.7 | ||||||||||||
| Less acquisitions |
— | — | 3.0 | — | 3.0 | ||||||||||||
| Free cash flow |
$ | 20.0 | $ | 26.2 | $ | 7.6 | $ | (9.7 | ) | $ | (13.6 | ) | |||||
| (1) | Free cash flow for fiscal 2008 and fiscal 2006 include the cash used for the Dahle acquisition of $3.0 million and the Jared M. acquisition of $3.0 million, respectively. |
ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
| Exhibit No. |
Description | |
| 99.1 | Investor Slide Presentation. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CASUAL MALE RETAIL GROUP, INC. | ||
| By: | /s/ DENNIS R. HERNREICH | |
| Name: | Dennis R. Hernreich | |
| Title: | Executive Vice President and Chief Financial Officer | |
Date: June 29, 2010
 Investor
Presentation Exhibit 99.1
******************** |
 2
Forward Looking Statements
This
presentation
contains
certain
forward-looking
statements
concerning
the
Company's
operations,
performance,
and
financial
condition.
Such
forward-looking
statements
are
subject
to
various
risks
and
uncertainties
that
could
cause
actual
results
to
differ
materially
from
those
indicated.
Such
risks
and
uncertainties
may
include,
but
are
not
limited
to:
the
failure
to
implement
the
Company's
business
plan
for
increased
profitability
and
growth
in
the
Company's
retail
stores
sales
and
direct-to-consumer
segments,
the
failure
of
management
to
develop
the
Company’s
new
direct
to
consumer
businesses,
the
failure
of
changes
in
management
to
achieve
improvement
in
the
Company's
competitive
position,
adverse
changes
in
costs
vital
to
catalog
operations,
such
as
postage,
paper
and
acquisition
of
prospects,
declining
response
rates
to
catalog
offerings,
failure
to
maintain
efficient
and
uninterrupted
order-taking
and
fulfillment
in
our
direct-to-consumer
business,
changes
in
or
miscalculation
of
fashion
trends,
extreme
or
unseasonable
weather
conditions,
economic
downturns,
escalation
of
energy
costs,
a
weakness
in
overall
consumer
demand,
increases
in
wage
rates,
the
ability
to
hire
and
train
associates,
trade
and
security
restrictions
and
political
or
financial
instability
in
countries
where
goods
are
manufactured,
increases
in
raw
material
costs
from
inflation
and
other
factors,
the
interruption
of
merchandise
flow
from
the
Company's
centralized
distribution
facilities,
competitive
pressures,
and
the
adverse
effects
of
natural
disasters,
war,
acts
of
terrorism
or
threats
of
either,
or
other
armed
conflict,
on
the
United
States
and
international
economies.
These,
and
other
risks
and
uncertainties,
are
detailed
in
the
Company's
filings
with
the
Securities
and
Exchange
Commission,
including
the
Company's
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended
January
30,
2010
filed
on
March
19,
2010
and
other
Company
filings
with
the
Securities
and
Exchange
Commission.
Casual
Male
assumes
no
duty
to
update
or
revise
its
forward-looking
statements
even
if
experience
or
future
changes
make
it
clear
that
any
projected
results
expressed
or
implied
therein
will
not
be
realized. |
 Company
Overview •
Largest multi-channel specialty retailer of men’s big and tall
(B&T) market
•
Vertically integrated multi-channel model of 476 stores (47
states), direct to consumer presence in U.S., Canada and EU
•
Geographically and demographically diverse customer base
–
2.5 million active customers
–
90% enrollment in Loyalty program
•
2009 sales of $395 million. EBITDA of $23 million (5.8%)
–
80% retail sales
–
20% direct to consumer
•
2009 free cash flow of $26 million
–
$11 million in debt at end of FY 2009
3 |
 Attractive Big
and Tall Segment •
Annual sales of men’s B&T market is approximately $6B
•
B&T men account for approximately 11% of the U.S.
population
•
Growing at almost twice the rate of the regular size
men’s apparel market
•
B&T consumers shop 50% more for apparel on the web
than regular sized consumers
•
B&T market is highly fragmented
4 |
 5
Growing Obesity Trends Among U.S.
Adults
1985
2005
2000
1995
1990
2007
No Data
<10% 10%–14%
15%–19%
20%–24% 25%–29% >30%
(*BMI
30, or about 30 lbs overweight) |
 Company Strategic
Repositioning: 2003-2009 •
Merchandise:
built comprehensive demographic and socio-
economically accessible range of product assortments and brands
•
Vertical
Model:
fully
integrated
stores
and
direct
to
consumer
businesses
into
a
multi-channel
platform
•
Systems:
built elaborate store planning and size management
applications
•
Marketing:
reformulated marketing program to focus on customer
base
•
Expense Structure:
rationalized expense structure and lowered
inventory levels
•
Culture:
implemented advanced in-store sales culture
6 |
 Rebound to
Financial Health: 2009 vs. 2007 •
Maintained operating margin after a sales decline of 15% over
two years
–
Increased gross margin 150 bps in 2009 (from 2008)
–
Lowered the expense ratio 190 bps in 2009 (from 2008)
–
Eliminated in 2009 unproductive marketing spend and reduced
marketing spend to 5% of sales
•
Substantial financial improvements over the two years:
–
Decreased inventory by 24%
–
Increased free cash flow by $36 million
–
Reduced total debt by $47 million, or 80% to $11 million
7 |
 8
Growth of Direct to Consumer
Business |
 *Average household income
9 |
 Today’s
Casual Male •
Dominant market position in unique niche
•
Positioned across demographically diverse, loyal
customer base
•
Efficient infrastructure to manage numerous sizes,
multiple lifestyles and diverse customer base
•
Strong balance sheet and cash flow
•
Opportunity to grow long-term market share and
accelerate financial returns
10 |
 Strong New
Growth Opportunities •
Capture higher wallet share of existing loyal customers
–
Currently capture around 50% of total apparel spending of average
active customer
•
Develop the 42”-46”
business segment
–
Accounts for 65% of the overall men’s B&T market but only 20% of
our business
•
Further leverage direct to consumer business
–
Targeting 30% of total sales from the current 20% level
11 |
 Hybrid Stores
Test Goal:
Broaden the target market and improve store-level
profitability by combining Casual Male and Rochester stores
in five markets
Results:
•Maintained
high customer retention
•Created
attractive cross-selling environment
–
50% increase from average CMXL store ticket
•Dramatic
turnaround in cash flow –
From breakeven in the converted stores to 16%
12 |
 •
Combination of Casual Male XL, Rochester Clothing, B&T
Factory Direct and Shoes XL
•
Average size 10,000-12,000 square feet
•
Concept appeals to a larger base of customers
•
Offers extensive selection of products in one location
–
Good, better, best assortment
–
2,000 styles compared to 600 for an average Casual Male store
–
Twice the number of brands
•
Strong survey and focus groups scores
–
Requesting bigger store, aisles and dressing rooms
–
In store tailor
–
Willing to drive 1 hour
13
Destination XL™
(DXL™) Stores |
 DXL
Storefront 14 |
 DXL Layout
15 |
 Compelling DXL
Returns •
Expect greater store productivity and profitability
–
Capture greater percentage of customer’s clothing budget
–
Better leveraging of expenses --
occupancy, labor productivity and
local/district management
•
Projecting higher 4-wall profits than combined profits of
individual stores
–
Targeting between 30%-35% store operating margin
•
Potential to capture additional market share
–
Attract new customers (42”-46”
waist)
–
Better cross-selling environment to capture greater share of
apparel wallet from existing customers
16 |
 DXL Impact
•
Consolidate metropolitan locations
•
Total merchandise assortment/brands increase while
total inventory across market decreases
–
DXL to carry up to 2,000 styles compared to 600 for an
average CMXL
•
Neutral to square footage and inventory
•
Lower operating occupancy costs
•
Incremental to existing 4-wall profitability
•
Greater potential to increase market share
17 |
 Chicago
18
DXL
Schaumburg, IL
0.9 miles
9451 Schaumburg, IL
9183 Niles, IL
11.4 miles
9512 Bloomingdale, IL
11.2 miles |
 DXL Timeline
- 2010
Location
Size
Type
Store
Closings
Opening
Schaumburg, IL
11,967 Sq Ft
New store location
3 stores
Summer
Memphis, TN
9,758 Sq Ft
Convert CM XL store
2 stores
Summer
Houston, TX
11,027 Sq Ft
Add 4,500 sq ft to
existing Rochester
store and convert
2 stores
Summer
Las Vegas, NV
13,206 Sq Ft
New store location
2 stores
Fall
Store Openings
19 |
 DXL Multi
Channel Solution 20
www.destinationxl.com
•
DXL website launch first
quarter 2011
•
Customer is able to
shop by concept, brand,
lifestyle or price point in
one simple, easy
location |
 Long-Term
Margin Growth •
Long-term operating margin potential of 8%-12%
–
Recover $70M in lost sales as economy improves
–
Increase the amount spent by existing customers
–
Appeal to the 42”-46”
waist size market segment
–
Grow the direct business to 30% of sales
21 |
 Investment
Highlights •
Dominant niche positioning
•
Strong and growing market
•
Clean balance sheet
•
Positive free cash flow
•
Long-term market share opportunities
•
Accelerating financial returns
22 |
 Financial
Performance 23 |
 Sales and Gross
Margin 24
(In millions) |
 Expense
Management 25
(In millions)
(In millions)
SG&A
Marketing Expense |
 Free Cash
Flow Free cash flow is defined as cash flow from operating activities, less
capital expenditures and discretionary store asset acquisitions.
26 |
 Balance
Sheet 2010
Projected
Year End
2009
2008
2007
Inventory
$85.0M
$90.0M
$98.6M
$117.8M
Borrowing
under revolver
0
$3.5M
$38.7M
$41.0M
Cash on hand
$10-15M
0
0
0
Fixed term loan
$3.0M
$7.6M
$12.5M
$17.3M
27 |
 Strong Capital
Structure to Support Growth
•
Current $110M loan facility expires October 2011; $57.8M
available at end of 2009
•
Expect to be debt free in 2010 with credit availability
approaching $70M
•
Approximately $20M free cash flow expected to be
generated in 2010 to reduce indebtedness and support
growth
28 |
 For
additional information: Jeffrey Unger
Casual Male Retail Group, Inc.
V. P. Investor Relations
561-482-9715 Office
561-543-9806 Cell
jeffunger@usa.net
jeffunger@tmo.blackberry.net
www.casualmalexl.com
www.destinationxl.com
29 |